The Market Monitor Minding the Nation's Business
By Riza Lozada
Infrastructure and utilities holding firm Metro Pacific Investments Corporation (MPIC) expressed confidence of hitting its target of P10 billion in core earnings after the conglomerate reported posting P8.2 billion in consolidated net income in the year until September reflecting a 28 percent profit hike from a year ago, MPIC chairman Manuel V. Pangilinan said.
MPIC attributed the strong profit growth to the positive performances of its units Manila Electric Company (MERALCO), Maynilad Water Services, Inc. (Maynilad), Manila North Tollways Corporation (MNTC), and the Hospital Group.
“The strong results for the year to date reflect continuing improvements in service levels as well as efficiency and financing gains for our operating companies.” Pangilinan said.
“Unfortunately, increasing regulatory risks of which tariff adjustments are the principal item may eventually degrade the level of services. This is a prospect we wish to avoid. In spite of continuing uncertainty on various tariff increases, we maintain our guidance on full year core earnings to P10 billion,” Pangilinan said.
The MPIC disclosure added contribution to the company’s net operating income showed that Meralco accounted for P3.9 billion or 39 percent of the aggregate contribution; Maynilad, P3.6 billion; MNTC, P2.1 billion; and the Hospital Group for P319 million.
Consolidated net income attributable to the parent company improved 30 percent to P7.8 billion in the first nine months from P6 billion a year earlier, MPIC said.
Non-recurring items of P452 million comprised of charges due to the increased shareholding in Meralco and project expenses.
Meralco’s core net income for the first three quarters stood at P15.8 billion improving by 11 percent with energy sales reaching 27,496 gigawatt hours (GWh).
The power distributor’s revenues declined by three percent to P197 billion as a result of lower distribution tariff and net pass-through generation, among others. Capital expenditures increased to P7.8 billion from P7.5 billion during the comparable period.
Meralco PowerGen Corp. (MGen), the generation sector unit, has reported that Redondo Peninsula Energy, Inc. (RP Energy) with its joint venture partners MGen, Therma Luzon, Inc. and Taiwan Cogeneration International Corporation have been working with the National Grid Corporation of the Philippines for the transmission line requirements of the plant.
RP Energy, a 2 x 300 megawatts (MW) circulating fluidized bed coal-fired power plant, expects its project financing agreement to be finalized by the first quarter of 2016, the MPIC disclosure said.
MPIC said another project, the San Buenaventura Power Limited (SBPL) joint venture project with MGen and Thailand’s New Growth B.V. is on the preparatory stage to secure financing.
SBPL project involves a 455 MW (net) supercritical coal-fired power plant in Mauban, Quezon, and is expected to begin commercial operations in 2019.
Global Business Power Corp, in which Meralco has a 22 percent stake, has a total of 709 MW of dispatch capacity with another 1 x 150 MW CFB coal-fired power plant under construction in Iloilo City through Panay Energy Development Corporation (Panay Energy). Equity in Panay Energy has been fully funded and commercial operation is estimated to begin late next year, MPIC reported.
MPIC effective ownership in Meralco is 32.48 percent from 27.48 percent after it completed this acquisition from Beacon in April this year and resulting to reduced debt in Beacon, and subsequently increasing Meralco’s income share to MPIC.
Maynilad total revenues also increased by five percent to P14.2 billion for the nine-month period from P13.6 billion in the same period last year owing to its “billed volume” of customers increasing by six percent to 1,247,204 from 1,176,010, and the increase in tariff effected last July.
Core net income reached P7.2 billion in the first three quarters in 2015, 12% higher from P6.4 billion recorded in the same period last year.
“By contrast, Reported Net Income was up 22% to 7.1 billion from 5.8 billion last year when it was held back by one-time separation expenses as a result of a redundancy program,” the MPIC report said.
Non-Revenue Water (NRW) including those lost through leaks and pilferage was recorded at 29.4 percent compared to eight years ago that marked a high of 68 percent owing to Maynilad’s repair services reaching 20,870 pipe leaks across its concession area.
MPIC wholly- owned MetroPac Water Investments Corp. (MWIC) and Equi-Parco Construction Co. recently received a notice of award for the bulk supply of water together with operation and management of the distribution network of the Laguna Water District. MWIC will own 30 percent of the consortium.
MPTC’s core net income of P2 billion for the first nine months was 27 percent higher than the P1.5 billion recorded a year earlier as a result of strong traffic growth and increased shareholding in the NLEX.
Average daily entries rose nine percent on the North Luzon Expressway (NLEX) and 10 percent on the Manila-Cavite Expressway (CAVITEX) from a year earlier.
MPTC increased its shareholding in MNTC through a 3.9 percent direct acquisition for P1.5 billion in January 2014 and additional effective shareholding of 4.6 percent for P1.7 billion in July 2014.
Various segments of projects are underway including Segment 9 of the NLEX Harbour Link, Segment 10 from Valenzuela City all the way to C3 in Caloocan City, and Segment 3A-1 of the C5 Link Expressway, part of the existing CAVITEX network, and the management, operation and maintenance of the 94-kilometer Subic-Clark-Tarlac Expressway (SCTEX).
The NLEX Harbour Link and Citilink projects with the expansion of the CAVITEX and the integration of the SCTEX would have MPTC investing P33 billion over the next few years to complete its construction.
It is therefore imperative that overdue tariff increases be implemented to enable MPTC and MPIC to fund these projects using internal resources and external debt according to MPIC.